The Present Floating Exchange Rate System Is Not a Totally

question 107

Multiple Choice

The present floating exchange rate system is not a totally free float because

• A) free floating exists in theory only.
• B) some governments refuse to manage their free float.
• C) some central banks from time to time intervene in the market to buy or sell large amounts of currency to affect the supply and demand of a particular currency.
• D) Free floating isn't free, given the exchange rate of 0.05 to 0.15.

---

Definitions:

Good

A tangible item or service that can be bought, sold, or traded.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive.

Tax

A necessary economic duty or another sort of imposition exacted from a taxpayer by a governmental agency to allocate funds for government activities and multiple public financial needs.

Good

A tangible item that satisfies some human want or need, which can be transferred from the producer to a buyer.